EXHIBIT 10.26
PortaCom Wireless
Kingdom of Cambodia
Telecommunications Project
October 1996
JOINT VENTURE AGREEMENT
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For the establishment of a joint enterprise for a CDMA based telecommunication
system in THE KINGDOM OF CAMBODIA between THE MINISTRY OF POSTS AND
TELECOMMUNICATIONS OF CAMBODIA (MPTC) and PORTACOM WIRELESS, INC.
JOINT VENTURE AGREEMENT
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In reference to:
I) Request for approval of an investment by PortaCom Wireless, Inc. for a CDMA
based Telecommunication System;
II) Letter No. 232/96 dated 16/02/96 from the Council for the Development of
Cambodia;
III) Letter No. 1052 SCN dated 17/09/96 and 1204 scn dated 29/10/96 from the
office of Prime Ministers.
THIS JOINT VENTURE AGREEMENT is made and entered into this 26/th/ December, 1996
by and between:
A. The Royal Government of Cambodia represented by the Ministry of Posts and
Telecommunications of Cambodia (hereinafter referred as "Party A") having its
principal office at the corner of ▇▇▇▇▇▇ ▇▇/▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇;
AND
B. PORTACOM WIRELESS, INC. (hereinafter referred as PCW or as "Party B"),
represented herein by ▇▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, its President and Chief Executive
Officer, and ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, its Vice-President, having its principal office
at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
U.S.A., and Khmer Sameky Telecom Co., Ltd., a Cambodian Limited Liability
company, represented herein by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, its President and Chief
Executive Officer, having its principal office at ▇▇. ▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇
▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇.
WHEREAS, Party A experienced in telecommunications business ventures and
regulatory authorities in the Kingdom of Cambodia, its interested in con-
operating with PCW;
WHEREAS, Party B holds significant experience in the development, start up,
operation and ownership of wireless and territorial based telecommunications
networks and services in emerging market;
WHEREAS, Party A and Party B mutually desire to enter into this Agreement to
establish and operate a CDMA based telecommunications System in the Kingdom of
Cambodia.
NOW, therefore, the parties hereby agree as follows:
1. DEFINITIONS
"MPTC" means Ministry of Posts and Telecommunications of Cambodia as a
regulator.
"Company" means a to be formed Cambodian Limited Liability company "American
Cambodian Telecom, LTD."
"Cambodian Law" means any laws, treaties, statutes, regulations, decrees and
other legally binding promulgation of any national or local Cambodia
governmental authority (ies) or body (ies), which are authorized to make such
laws, statutes, regulations, degrees or promulgations now in existence or that
may in the future come into force in the Kingdom of Cambodia throughout the term
of this Agreement.
"Equipment" means the Mobile Telephone Exchange (MTX), Mobile Switching Centers
(MSC), Base Station Controllers (BSC), Base Transceiver Station (BTS), Radio
Base Station (RBS), transmission equipment and other network element which, when
connected/ interfaced together, constitutes a CDMA System described in the
attached License.
"CDMA" means Code Division Multiple Access telecommunications technology and or
other PCS equivalent technology operated on the 1900 MHZ frequency band.
"CDMA Based Telecommunication System" and or "CDMA System" means the
installation and operation of base stations, cellular switch exchanges and any
other facilities and equipment directly involved in the provision, development
and operation of a PCS 1900 based mobile cellular system.
"License" means the License awarded to the Company by MPTC for the installation
and operation of a CDMA Based Telecommunications System in the Kingdom of
Cambodia. A copy of which is attached hereto and incorporated herein by
reference.
"Net Interconnect Charge" means the difference between the in payment and out
payment of interconnect charges with all other operations in Cambodia.
2. NAME
The name of the company is American Cambodian TeleCom, LTD. (Hereinafter
referred to as the "Company"). The registered office of the Company shall be at
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ or P.O. Box
2352, Phnom Penh, Kingdom of Cambodia.
3. OBJECTIVES
The Company shall, through its License, install and operate base stations,
cellular switch exchanges and any other facilities and equipment directly
involved in the provision, development and operation of a PCS 1900 CDMA based
mobile cellular system and a paging system (Annex "A".)
The Company shall obtain all necessary licenses, permits and authorizations
required under applicable law to install, operate and expand, as and when
necessary, the PCS 1900 CDMA based mobile cellular system throughout the Kingdom
of Cambodia excluding Wireless Local Loop.
The Company will also market and sell CDMA telecommunications services,
equipment, terminals, handsets to customers throughout the Kingdom of Cambodia.
4. DURATION
The duration of this agreement shall be the same as the duration of the License
for the provision and operation of CDMA based Telecommunications System within
the
Kingdom of Cambodia awarded to PortaCom by MPTC.
This Agreement shall be reviewed every five (5) years by both parties if
requested by any party.
5. START OF CDMA SYSTEM COMMERCIAL SERVICE
PortaCom shall start the commercial service of CDMA system not later than 24
months after the signing of this Joint Venture Agreement. The license for CDMA
System for PortaCom shall become void if there is any deviation from the above
timing.
6. CAPITAL AND SHARES
A. For the first year after signing this Agreement, the initial share capital
of the Company shall be 50,000,000.00 Cambodian ▇▇▇▇, or the monetary equivalent
in US Dollars, which shall initially be contributed and owned entirely by PCW
and Khmer Sameky Telecom Co., Ltd. according to the following schedule:
I) PCW shall own 84% of the share capital and shall contribute US $ 15,925.92
or the monetary equivalent in Cambodian ▇▇▇▇; and
II) Khmer Sameky TeleCom Co., LTD. shall own 14% of the share capital and shall
contribute US $ 2,592.59 or the monetary equivalent in Cambodian ▇▇▇▇.
B. The share capital of the Company can be increased by creating new shares in
cash or by any other means that the Board of Directors and/or shareholders
approve of, provided that it is in compliance with the statutes of the Company
and Cambodian Law. Any debt financing approved by the Board of Directors shall
be negotiated and secured by the Company on commercial terms. Such loans shall
only be guaranteed by the Company and/or PCW when, and if necessary. Under no
circumstances shall the MPTC or any other government agency or ministry
guarantee the debt of the Company unless their prior written consent is
obtained.
At the end of the first year after signing this agreement, PCW agrees to buy out
Khmer Sameky TeleCom Co., Ltd.
C. After one year, the initial share Capital of the Joint Enterprise is USD
5,000,00.00 (US Dollars Five Million and zero/100) of which the share capital of
Party A is 25% (twenty five percent) and 75% (seventy five percent) the share of
Party B.
D. The total contribution 100% (one hundred percent) for the share capital
shall be
made by Party B.
E. At the end of the Agreement and License period, or any extension, or the
early termination of the Agreement, MPTC shall be entitled to 100% (one hundred
percent) of the fixed asset of the Company.
F. The capital of the Joint Enterprise may be increased by the issuance of new
shares or by other means as the Board of Directors and/or shareholders deem
appropriate in accordance with the articles of Association and the applicable
law of the Kingdom of Cambodia. In such case, the share holding ratio mentioned
above shall be maintained by Party A on a twenty five (25%) percent of the first
Capital Joint Enterprise of US $5,000,000.00 of American Cambodian TeleCom, LTD.
Party A has the right to purchase any new share to maintain the share holding
ratio.
7. OBLIGATION OF PARTY A
Party A shall be responsible, but not exclusively, for the following:
1. Providing appropriate space, if available, in MPTC building and on MPTC land
for the installation of Company equipment;
2. Assisting the Company in processing all customs and importation clearances
for equipment entering the Kingdom of Cambodia;
3. Assisting expatriate personnel to obtain entry visa and work permits and
processing all related documentation;
4. Keep the contents of this Contract in full confidence and refrain from
disclosing the contents hereof to a third party, except as required by
5. Assisting for the Company, pursuant to the Company's application with the
Council for the Development of Cambodia (CDC) and or any application to the
Cambodian Investment Boards (CIB), the most favorable income and importation tax
incentives, and any other investment incentives, available under current, or
future Cambodian Law.
8. OBLIGATION OF PARTY B
Party B shall be responsible, but not exclusively, for the following:
1. Assisting in the provision of expertise in the establishment of the network;
2. Ensuring to bring to the Kingdom of Cambodia the modern technologies for the
improvement of telecommunication network;
3. Assisting in the recruitment of expatriate personnel;
4. Assisting in the provision of ongoing management expertise of the business;
5. Responsible for economic analysis pertaining to the business and the
expenses incurred therefrom, upon request;
6. Assisting in the training of Cambodian technical personnel, management,
sales and marketing personnel;
7. Arranging for the import of material and technical equipment with the
agreement in principle of Party A and at prices based on International Market;
8. Keep the contents of this contract in full confidence and refrain from
disclosing the contents hereof to a third party, except as required by law or
with the prior written consent of MPTC;
9. The Company shall deposit USD 200,000.00 (two hundred thousand and zero/100
US Dollars) within 45 working days after signing this Agreement. Failure to do
so, this Agreement shall be void. If the Company has deposit in a full required
amount, the Company shall have a right to withdraw the full deposit amount after
commencing the commercial business.
9. OBLIGATIONS OF THE PARTIES
Each Party shall:
1. Use its best efforts to assist the other Party in Performing such other
Party's obligations, hereunder and to ensure the success of the Company;
2. Use its best efforts to maximize publicity and increase market awareness of
the Company and its products and/or services throughout the Kingdom of Cambodia
and internationally.
10. MANAGEMENT OF THE JOINT ENTERPRISE
1. The Board of Directors shall determine the policies of the Company and
direct its
overall management, decide all major issues concerning the Joint
Venture Company in according with this document, the Articles of Association and
the applicable laws of the Kingdom of Cambodia.
2. The Board of Directors shall consist of five (5) members, appointed as
follows:
Party A two (2) members
Party B three (3) members
- The Chairmen of the Board of Directors shall be appointed by Party B.
- The Vice Chairman shall be appointed by Party A.
3. The Chairman of the Board of Directors shall be the Chairman of the Board
Meeting and shall have the power and duty to call a meeting, to take initiative
and to give advice in respect of policies of the Joint Enterprise;
4. The Joint Enterprise shall be managed by the General Manager;
5. The General Manager and the Secretary of the Board of Directors shall be
appointed by B;
6. The Deputy General Manager shall be appointed by Party A;
7. The General Manager and the Deputy General Manager shall be directors of the
Board;
8. The General Manager shall be responsible directly to the Board of Directors
for the daily business operations and affairs of the Joint Venture Company and
shall supervise the activities of all other personnel.
In case of absence of General Manager, the Deputy General Manager shall act on
his behalf having the same authority as conferred to him.
11. ANNUAL GENERAL MEETING (SHAREHOLDERS MEETING)
The annual general meeting of the Joint Enterprise Company shall be convened for
the election of directors, approval of the audited financial statements and the
transaction of other business not less than once a year, in accordance with the
Articles of Association and the laws of the Kingdom of Cambodia.
12. EXTRAORDINARY GENERAL MEETING
The extraordinary general meeting of the Company shall be convened in accordance
with the provisions of the Articles of Association and the laws of the Kingdom
of Cambodia.
13. BOARD OF DIRECTORS MEETING
At every Board of Directors meeting, the Chairman of the Board shall preside
over as the Chairman of the meeting. In the absence of the Chairman of the
Board, the Vice Chairman shall preside over the meeting. In the case where both
the Chairman and Vice Chairman of the Board are absent, the Board shall appoint
on Director to chair the meeting. The investment and the expansion of the
business and the operations of the Joint Enterprise can be performed only when
the Board of Directors deem appropriate, provided that the said investment and
expansion shall be limited to the field of telecommunications only.
The powers and duties, the proceeding, the vote of Directors and the quorum of
Directors meeting shall be defined in accordance with the provisions of the
Articles of Association and the applicable laws of the Kingdom of Cambodia.
14. LIMITATION OF LIABILITY
The debts, obligations and liabilities of the Company, whether arising from or
in connection with any contract, tort or otherwise, shall be the sole
responsibility of the Company, and no Director, Officer, Manager or Attorney of
the Company shall be personally liable for any such debt, obligation or other
liability of the Company solely by reason of being a Director, Officer, Manager
or Attorney of the Company.
15. INDEMNIFICATION OF DIRECTORS, OFFICERS, MANAGERS, EMPLOYEES AND ATTORNEYS
A. Each person who was or is made a party, or is threatened to be made a party
to, or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding") by reason
of the fact that he or she is or was a Director, Officer, Manager, Employee or
Attorney of the Company, whether the basis of such proceeding is alleged action
in an official capacity or otherwise, shall be indemnified and held harmless by
the Company to the fullest extent authorized by Cambodian Law (including
indemnification for negligence or gross negligence but excluding indemnification
(I) for acts or omissions involving actual fraud or willful misconduct or (II)
with respect to any transaction from which the indemnitee derived improper
personal benefit), against all expense, liability and loss
(including attorney's fee, judgments, fines, exercise tax or penalties and
amounts paid in settlement) reasonably incurred or suffered by such indemnified
person in connection therewith.
B. The right to indemnification conferred in Clause A of this section 15 shall
include the right to be paid by the Company the expenses (including attorney's
fee) incurred in defending any proceeding in advance of its final disposition
(hereinafter an advancement of expenses"). The rights to indemnification and to
advancement of expenses shall be contract rights and such rights shall survive
as to an indemnified person who has ceased to be a Director, Manager, Officer,
Employee or Attorney and shall inure to the benefit of the indemnified person's
heirs, executors and administrators.
C. The rights to indemnification and to the advancement of expenses shall be
inclusive of any other right that any other person or entity may have or
hereinafter acquire under any statute, agreement, vote or otherwise.
D. The Company may maintain insurance, at its expense, to protect itself and
any Director, Manager, Officer, Employee or Attorney of the Company against any
expense, liability or loss, irrespective of whether or not the Company would
have the power or indemnify such person(s) against expense, liability or loss
under Cambodian Law.
E. The Company may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to advancement of expenses to any
other agent of the Company to the fullest extent of the provisions of this
section with respect to the indemnification and advancement of expenses of
Directors, Officers and Attorneys of the Company.
16. SHARING OF REVENUES
MPTC shall be paid the following percentages of gross revenue, which are derived
from the following charges:
- Connection fee
- Monthly rental
- Local charges
- Long Distance charges
- Surcharge on international calls
- Net interconnect settlement charge
- Profit of the sales of handsets, equipments, terminals and others of the CDMA
PCS 1900 System
- All other service charge
- 7% gross revenue per annum for the first three (3) years of commercial
operation of CDMA System;
- 12% gross revenue per annum for the second three (3) years of commercial
operation;
- 15% gross revenue per annum for the rest of the contract duration.
17. DISTRIBUTIONS
Within ninety (90) days following the completion of the yearly audit, the
General Manager shall prepare a proposal based on the results of the yearly
audit regarding the distribution of net profits and submit it to the Board of
Directors for examination and approval notwithstanding the equity interests in
clause 6 above, the parties agree that any dividend shall be in the proportion:
- Party A 20% (twenty percent)
- Party B 80% (eighty percent)
18. FINANCIAL STATEMENTS, ACCOUNTING AND BALANCE SHEETS
1. The fiscal year of the Company shall commence on January 1/st/ and end on
December 31/st/ of each year. For the first year of operations, the fiscal year
shall start from the commencement of commercial operations and end on December
31/st/ of that year;
2. The internal quarterly financial statements of the Joint Enterprise shall be
carried out in accordance with the International Accounting Standard (IAS) and
recognized by the Ministry of Finances of the Kingdom of Cambodia;
3. The account of the Joint Enterprise shall be audited by two (2) independent
external auditors, one each to be appointed by each party;
4. Within sixty (60) days after the end of each fiscal year, the General
Manager shall present to the Board of Directors at the Annual General Meeting a
report on the operations, accounting and financial statements as at the end of
the previous year;
5. Statistic report, as requested by the MPTC to all operators shall be
submitted to the MPTC.
19. ARBITRATION
A. Both parties agree that all issues pertaining to this Agreement shall be
settled expediently and amicably through discussions and negotiations.
B. Failing a negotiated agreement regarding any disputes or differences
pertaining to this agreement, including any question regarding its existence,
validity or termination, the dispute shall be referred to Arbitration in
accordance with the Rules of Arbitration and Conciliation of the International
Chamber of Commerce. The award of such an Arbitration shall be final and binding
upon parties.
C. Any Arbitration pursuant to this Article 19 shall take place at a location
to be agreed by both parties, or in Singapore if there is no agreement regarding
the location, and shall be conducted in English language.
20. FORCE MAJEURE
Neither party shall be liable for any breach of this Agreement caused by act of
God, insurrection or civil disorder, war or military operations, national or
local emergency, compliance with any statutory obligation, industrial disputes
of any kind, fire, lighting, explosion, flood, subsistence, weather of
exceptional severity or omissions of persons for whom neither Party to the
Agreement is responsible or any other cause outside its reasonable control.
21. MISCELLANEOUS
This Agreement has been prepared in English and translated into a version in
Khmer. In the event of any dispute and/or arbitration concerning this Agreement,
including any question regarding its existence, interpretation, validity or
termination, solely the English version shall control.
22. FINAL PROVISION
This Agreement has been prepared in both Khmer and English languages. This
agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be fully
executed on the date first written above.
MINISTRY OF POST AND TELECOMMUNICATIONS
KINGDOM OF CAMBODIA
By: /s/ H. E. So Khun
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Name: H. E. So Khun
Title: Secretary of States, MPTC
PORTACOM WIRELESS, INC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
KHMER SAMEKY TELECOM CO., LTD
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President & CEO
WITNESS
By: /s/ ▇▇▇ ▇▇▇ Sea By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇ Sea Name: ▇▇▇▇▇ ▇▇▇▇▇▇
